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WAEC Economics 1991 (August) Question 25

Question 25

Price Determination

A shift of the demand curve to the right when the supply curve remains constant, implies that

  1. A.both price and quantity demanded will increase
  2. B.only price increases
  3. C.both price and quantity demanded will decrease
  4. D.the price remains constant
  5. E.the price falls.
Show the answer and explanation

Answer: A (both price and quantity demanded will increase)

Explanation

An increase in demand with unchanged supply raises both the equilibrium price and quantity.